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The July 11, 2006, edition of the Wall Street Journal contained an excellent opinion piece by Daniel Yergin, chairman of Cambridge Energy Research Associates, in which he posed the question: “What does ‘energy security’ really mean?”

What is so striking about his article is that his analysis easily could describe power industry politics between low-cost states (suppliers) and high-cost states (consumers).

“Consuming countries declare they want ‘security of supply’—that is, reliability and availability of energy at reasonable prices,” Yergin writes. Does this not sound like the statements often made by high-cost states?

He continues: “Exporting countries, whether Russia or the Middle East, turn around and talk of ‘security of demand’—sufficient access to markets and consumers to justify future investment (and protect their national revenues).” Thus, in the western U.S., state representatives often have questioned whether the benefits of selling their low-cost energy into an energy market would offset the resulting higher cost to their own constituents.

Perhaps the electric industry—including state regulators and politicians—might stand to learn a thing or two from Big Oil.

For one, the oil industry has begun to realize that lack of cooperation can undermine the entire global energy market. Similarly, a lack of cooperation among the 50 states could threaten the entire U.S. energy system.

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